Katy area real estate presenting challenging market for buyers

Pandemic, low rates push home-buying frenzy

By R. Hans Miller | News Editor
Posted 5/13/21

Homebuyers continue to seek out homes zoned to Katy ISD schools, but according to realtor Christi Borden of Better Homes and Gardens Gary Greene, homeowners are also seeking to move to the Katy area …

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Katy area real estate presenting challenging market for buyers

Pandemic, low rates push home-buying frenzy

Posted

Homebuyers continue to seek out homes zoned to Katy ISD schools, but according to realtor Christi Borden of Better Homes and Gardens Gary Greene, homeowners are also seeking to move to the Katy area because of lifestyle preference changes caused by the COVID-9 pandemic.

“I (had clients close in late March) that had a really nice condo in east downtown (Houston) but you realize when all the cute walkability places you had for moving into the Heights and all those places where everybody wants to live –  when those are all shut down (because of COVID-19, you realize) that your small space that you bought because you never planned to be indoors (no longer works for you),” Borden said.

As a result, homes in Greater Houston, especially in good school districts like Katy ISD, have seen increasing demand since the pandemic started, Borden said. Katy area homes don’t last long, Borden said, saying she estimates the market had, at times, about one month of inventory or even slightly less than that.

Months of inventory is a measurement that considers the number of homes available on the market and the average time it takes to sell that many homes, among other factors.

Borden said she has seen her clients make eight or nine offers on different homes, only to be outbid as homes go for $15,000 or more over listing price. In many cases, she said, since home loans are based on appraised value, buyers are having to come to the negotiating table with a larger down payment to make up the difference between the amount they’re approved for mortgages and the asking price of the property to be competitive.

“Sellers don’t care about the bank valuation,” Borden said. “They care about what a ready, willing and able buyer is willing to pay for the home. So, you may need to have enough cash on hand to bridge that delta between the bank's appraisal and what you have to offer to pay for it.”

Bill Lacy, a senior mortgage originator with Independent Mortgage, confirmed Borden’s assessment. He said that, over the last year, he’s seen many home buyers have to bring more money to the table to close on a home purchase.

Lacy said that’s a change from the year before the pandemic from about March 2019 to March 2020.

“I was fairly busy,” Lacy said. “Interest rates were – at the time – at historic lows. Those were mid-threes and people were looking for houses and could find interest rates that were reasonable and loan programs were out there to meet most everyone’s needs.”

However, he said, as the pandemic has moved on, interest rates have gone even lower than prior to lockdowns in the late spring of 2020 as people were stuck at home.

“It was a normal market and everybody wasn’t trying to get mortgage loans at the same time,” Lacy said. “So it was just a regular good old mortgage market.”

He said clients have told him that, once stay home executive orders were in effect, clients began seeing the faults in their homes and began looking to upgrade, especially as they looked to take advantage of further reduced interest rates over the last year or so. Compared to the year before COVID-19, things have changed, Lacy said.

“Back then, during that (2019-21) window, you could look at several houses and talk to realtors …,” Lacy said. “There was an abundance of houses on the market that were in good shape. You could make a good offer and negotiate with somebody and it wasn’t a buyers’ market; it wasn’t a seller’s market – it was a balanced market.”

During the pandemic, both Borden and Lacy said they saw things shift to a definite seller’s market. Homes, Borden said, have often gone for more than the appraised value in a very competitive market like the Katy area with more than one offer being the norm.

Data from the Houston Association of Realtors shows a definite increase in demand for new houses. In April of 2020, Greater Houston had 3.5 months of housing inventory. As of April 2021, the most recent month for which data is available, Greater Houston had 1.4 months of inventory. During those same months, average single-family sales prices rose from about $310,000 to roughly $371,000 across Greater Houston.

“I know some buyers that aren’t trusting the realtors when we tell them if there’s multiple offers, this home is probably going to sell over list. If the buyer is still trying to get a deal, that’s an ill-informed buyer,” Borden said. “That is a buyer who does not trust what they’re being told and that buyer will continue to lose (bidding wars).”

Real Estate, Katy, Sellers Market, Christi Borden, Bill Lacy, Mortgage